People For the American Way Foundation

Rise of the Corporate Court: How the Supreme Court is Putting Businesses First

From Bush v. Gore to Citizens United v. FEC: The Making of a Corporate Democracy, 2000-2010

A decade ago in Bush v. Gore,1 five Justices on the United States Supreme Court intervened in the 2000 presidential election to halt the counting of more than 100,000 ballots in Florida, thus delivering the presidency to the preferred candidate of America’s largest corporations–like Enron, Haliburton, Exxon-Mobil, Blackwater, AIG and Goldman Sachs. These corporations proceeded to shape public policy in significant ways, promoting financial deregulation, privatization and the spread of corporate welfare, the contracting out of warfare, and the creation of what economist James Galbraith has called a “predator state.”

In 2010, in Citizens United v. FEC,2 a case that dealt originally with the question of whether the electioneering communications provisions of the McCain-Feingold Act apply to “pay-per-view” movies produced by not-for-profit entities, five Justices on the Court, including the two named by President Bush himself–Chief Justice John Roberts and Justice Samuel Alito–reached out to ask a question that had not been posed to them. They then answered it, announcing that private businesses – including for-profit corporations – have a right to spend as much money as they want to elect or defeat candidates in political campaigns at all levels. The decision reversed numerous Supreme Court precedents and toppled dozens of long-standing campaign finance laws at the federal and state level, clearing the field to permanently remake America’s popular democracy into something like a “corporate democracy.”

Americans across the spectrum have been startled and appalled by the Citizens Uniteddecision, which will “open the floodgates for special interests—including foreign companies—to spend without limit in our elections,” as President Obama said in his 2010 State of the Union Address. According to a Washington Post nationwide poll, more than 80% of the American people reject the Court’s conclusion that a business corporation is a member of the political community entitled to the same free speech rights as citizens.3

Yet, the Court’s watershed ruling is the logical expression of an activist pro-corporatist jurisprudence that has been bubbling up for many decades on the Court but has gained tremendous momentum over the last generation. Since the Rehnquist Court, there have been at least five justices—and sometimes more—who tilt hard to the right when it comes to a direct showdown between corporate power and the public interest. During the Roberts Court, this trend has continued and intensified. Although there is still some fluidity among the players, it is reasonable to think of a reliable “corporate bloc” as having emerged on the Court.

At the time of the 2000 presidential election, the late economist John Kenneth Galbraith likened the Rehnquist Court’s imposition of its will on the American people to a corporate Board of Directors choosing a new CEO for a mass of passive shareholders. Whereas Article II of the real Constitution provides that the president shall name Supreme Court justices with the advice and consent of the Senate, Galbraith saw that the unwritten bylaws of our country now apparently authorized the Supreme Court to name the president.

His comment, spoken half in jest, was not only a lucid predictive reading of what public policy would be like in the Bush-Cheney period, but a haunting insight about how the rule of law itself has been redefined by the Court majority’s commitment to amplifying the corporate voice, reducing corporate liability, and expanding corporate power.

For more than a century, of course, the private business corporation has been a major force in our economy and society. Because corporations are chartered by the states and interact continuously with government regulators, employees in the workplace, consumers and investors in the marketplace, and our land, air and water, they are frequently in court. When they go to the Supreme Court as parties, sometimes they win, as surely they should, and sometimes they lose, which is also to be expected.

What is striking today, however, is how often the Roberts Court, like its predecessor the Rehnquist Court, hands down counter-intuitive 5-4 victories to corporations by ignoring clear precedents, twisting statutory language and distorting legislative intent. From labor and workplace law to environmental law, from consumer regulation to tort law and the all-important election law, the conservative-tilting Court has reached out to enshrine and elevate the power of business corporations –what some people have begun to call “corporate Americans”–over the rights of the old-fashioned human beings called citizens.

With Chief Justice John Roberts and Justices Samuel Alito, Antonin Scalia, Clarence Thomas and Anthony Kennedy in the driver’s seat today, the “least dangerous” branch of government now routinely runs over our laws and our politics to clear the road for corporate interests. When it comes to political democracy and social progress, the Supreme Court today is the most dangerous branch. The road back to strong democracy requires sustained attention to how the Court is thwarting justice and the rule of law in service of corporate litigants.

The American Workplace

Dirty Work: How the Court is Twisting Employment and Labor Law to Serve Corporate Wrongdoers

The Supreme Court has repeatedly trashed anti-discrimination law to let corporate wrongdoers off the hook. Everyone remembers the infamous 5-4 ruling in Lilly Ledbetter’s case, Ledbetter v. Goodyear Tire & Rubber Co. (2007)4. There, five justices (Alito, Roberts, Scalia, Thomas and Kennedy) held that, under Title VII, the female victim of decades of pay discrimination on the job who only learned of her biased treatment at the end of her career could not sue since the discrimination had begun more than 180 days before her court filing and the statute of limitations had therefore run. The four dissenters argued in vain that, given that Ledbetter was unaware that she was being paid less than men on the job, each discriminatory paycheck renewed the cause of action and the 180 days should be measured from the point at which she first learned of the salary double standard.

The majority’s outrageous ruling on behalf of the Goodyear Tire and Rubber Company caused a furor in the 2008 presidential election and helped produce a majority for electoral change. One of President Obama’s first acts in office was to sign the Lilly Ledbetter Fair Pay Act.

But Lilly Ledbetter and other workers in her situation were just more judicial roadkill along the highway in the majority’s campaign to restrict, rewrite, and squash anti-discrimination law.

Just last Term, in AT&T v. Hulteen (2009),5 a a 7-2 majority produced a fitting sequel to the Ledbetter decision. In that case, the Court reversed the Ninth Circuit Court of Appeals, which had found that AT&T had discriminated in calculating the pension benefits of female workers by subtracting for pension purposes the time they had taken off for pregnancy while not subtracting the time taken off by workers using other forms of disability leave. The majority reasoned that it was not against the law at the time to discount pregnancy leave—this was before Congress passed the Pregnancy Discrimination Act—and so the pay inequity followed from a “bona fide” pension plan. Thus, corporations were permitted to discriminate because they discriminated before. As Justice Ginsburg – one of the two dissenters – was quoted as saying in USA Today, the arguments in the case were “for me, Ledbetter repeated.”6

Similarly, last year in Gross v. FBL Financial Services (2009),7 the majority knocked the wind out of the Age Discrimination in Employment Act by ruling that age discrimination plaintiffs can no longer use the traditional “mixed motive” test from Title VII when bringing a case but must prove that age was the “but for” cause of their discriminatory treatment at the hands of an employer. Here, the Court tortured out a sharp distinction in the meaning of identical language in similar anti-discrimination statutes and effectively created a patchwork of different approaches, reducing the effect of the ADEA and the coherence of civil rights law generally.

The Union Makes Them Strong, but the Supreme Court Makes Them Weak

The main charter for the rights of workers in America is the National Labor Relations Act (1935), which makes it illegal to fire people for trying to organize a union. Under the Act, the National Labor Relations Board (NLRB) has the power to require employers to reinstate workers who were fired for union activity and give them back pay for the period they were unfairly dismissed. Yet, whenever the Board acts to enforce the rights of workers of this way, a corporate bloc on the Court often finds a way to reverse the Board’s action and undermine this essential right for working people.

To take an egregious example out of a vast field, consider the Court’s familiar 5-4 lineup in Hoffman Plastic Compounds v. NLRB (2002)8. In this case, the corporate employer, Hoffman Plastic Compounds, Inc., fired four employees who were participating in an organizing drive led by the United Rubber, Cork, Linoleum, and Plastic Workers of America, an AFL-CIO member union. After investigating the dismissals, the Board determined that the firings were an unfair labor practice and ordered the company to offer reinstatement and back pay to the four workers. The company initially accepted the discipline.

When it came time to pay up, the company argued that it should not have to compensate one of the workers, a blending machine operator named Jose Castro who was owed tens of thousands of dollars in back pay, because he was an undocumented alien. However, the Board found that Hoffman Plastic knew Castro was undocumented and continued to employ him for a period of more than three years after it learned of his status. The Board awarded Castro $66,951 in back pay, a sum that covered the period between the date of Castro’s termination and the date three-and-a-half years before when the company learned of his immigration status. The Board ruled that the award was necessary to satisfy both the remedial purpose of the statute and its deterrent purpose of keeping employers from hiring undocumented aliens to take advantage of their labor and then firing them if they join a union drive.

But Rehnquist, O’Connor, Scalia, Thomas and Kennedy cast aside deference to the NLRB’s administrative decision and overthrew the statutory arguments of the U.S. Attorney General , who is the official actually charged with enforcing immigration law. The majority simply threw Castro’s back pay award out the window.

In trying to justify this remarkable victory for a corporate wrongdoer, Chief Justice Rehnquist cited other “significant sanctions” that Hoffman Plastic received, including—brace yourself now– an order “that it conspicuously post a notice to employees setting forth their rights under the NLRA and detailing its prior unfair practices9.”

This extraordinary ruling directly thwarts the labor law policy against union-busting and the immigration law’s policy that tries to deter American corporations from hiring undocumented workers. As Justice Breyer wrote in dissent with Justices Stevens, Souter and Ginsburg, “in the absence of the backpay weapon, employers could conclude that they can violate the labor laws at least once with impunity.”10 He went on to explain that there is no basis in the National Labor Relations Act or in any immigration law for letting employers off the hook in a situation where they have violated both federal labor and immigration law. Indeed, as Breyer observed, the Court had always recognized that “the immigration law foresees application of the Nation’s labor laws to protect ‘workers who are illegal immigrants.’”11 If not, then corporate employers will have an incentive to continue hiring undocumented people illegally–an incentive that the corporate Court majority increased dramatically with its indefensible but characteristic opinion in Hoffman Plastic.

Downward pressure on the organizing and bargaining rights of American workers is constant on the Court. Last Term in 14 Penn Plaza LLC v. Pyett (2009)12, five corporate-minded justices –Thomas, Roberts, Scalia, Kennedy and Alito–dealt a blow not only to Service Employees International Union members in New York but millions of workers across the country when they upheld compulsory arbitration claims provisions that clearly undermine statutory anti-discrimination protections. Justice Thomas’ opinion put into a straitjacket a Supreme Court precedent more than three decades old standing for the principle that a union cannot contractually waive its members’ right to substantive workplace rights and protections guaranteed by federal law. Justice Souter and Justice Stevens, in stinging dissents, castigated Justice Thomas and the majority for mangling precedent and undermining the rights of American workers. But this is business-as-usual on the corporations’ Court.

A Thoroughly Corporate Environment: Supreme Activists Are Fouling the Waters and Diluting the Rights of Plaintiffs

Exxon Shipping Co. v. Baker (2008): Oil Spills and Punitive Damages

In 1989, in one of the worst environmental accidents in history, a 900-foot long Exxon supertanker called the Exxon Valdez, which was carrying over a million barrels of crude oil (53 million gallons) grounded on a reef off of Alaska, releasing a toxic flood of oil into Prince William Sound, in the process destroying vast amounts of marine wildlife and the livelihood of many fishing communities and native Alaskans.

The accident took place when the tanker’s captain, Captain John Hazelwood, a long-term alcoholic, suddenly and inexplicably left the bridge after speeding the tanker up, placing it on autopilot and leaving it in the hands of an inexperienced officer unlicensed to navigate that part of Prince William Sound. The catastrophic crash ensued.

Before the Valdez left port that night, Captain Hazelwood, a long-time alcoholic, had “downed at least five double vodkas in the waterfront bars of Valdez.”

Exxon knew all about Captain Joseph Hazelwood’s alcoholism. He had completed part of an alcohol treatment program but dropped out of its concluding segment and had stopped going to Alcoholics Anonymous meetings. Not only did he drink, according to the District Court, “in bars, parking lots, apartments, airports, airplanes, restaurants, hotels, at various ports, and aboard Exxon tankers,” but the District Court also heard testimony that he drank with Exxon officials and that Exxon managers knew that he had relapsed into his old drinking habits.

The jury awarded the plaintiff fishermen and nearby residents $287 million in compensatory damages and another $5 billion in punitive damages for Exxon’s corporate recklessness. After two remands and close study of the issue of punitive damages, the Ninth Circuit Court of Appeals reduced the punitive damages award to $2.5 billion and described Exxon’s conduct as “egregious.”

But even this pared-down judgment was way too much for Justices Roberts, Kennedy, Thomas, Souter and Scalia. In 200813, this bloc reduced the punitive damage award from $2.5 billion to $507.5 million. Indeed, the only thing that stopped them from deleting the award altogether was that they were one vote short of being able to find that a corporation is not responsible for the reckless acts of its own managers acting in the scope of their employment14.

What the 5-justice majority found, over the objections of dissenting liberal justices who accused them of legislating from the bench, was that it would impose in maritime tort cases a 1-1 ratio between compensatory and punitive damages—a formula found nowhere in the statute and essentially pulled out of a hat made by a big corporation. In dissent, Justice Stevens chastised the majority for interpreting the “congressional choice not to limit the availability of punitive damages under maritime law” as “an invitation to make policy judgments on the basis of evidence in the public domain that Congress is better able to evaluate than is this Court15.”

But Exxon, which amazingly ended up making money on the spill because of the resulting increase in oil prices, got its way with a corporate-leaning Court and ended up paying punitive damages equal to a day or two of company profits.

Watering Down Environmental Protection: A Steady Drip

Although the facts of the Exxon oil spill case are unusually striking, the decision is typical indeed. In the 2008-09 Term, for example, the majority reversed a decision that had been authored in the Second Circuit by then-Judge Sonia Sotomayor in order to find that the Environmental Protection Agency could dilute a Clean Water Act requirement that the electric power companies industry must use “the best technology available for minimizing adverse environmental impact” when taking water out of the nation’s waterways for cooling. The predictable majority–Scalia, Roberts, Kennedy, Thomas and Alito–in Entergy Corp. v. Riverkeeper, Inc. (2009)16, found that, in trying to determine the “best technology” for protecting fish, shellfish and other forms of aquatic life, the EPA could take into account the financial costs to the business—a ruling that twists the statute and constitutes a bounteous gift to the power companies.

Also last Term, in Coeur Alaska, Inc. v. Southeast Alaska Conservation Council (2009)17, the same corporate-tilting justices regrouped-with the addition of Breyer-to determine, under the Clean Water Act again, that a mining waste called “slurry discharge” could be poured directly into lakes by industry businesses holding a U.S. Army Corps of Engineers permit even though it is expressly prohibited by EPA rules.

Judicial Smokescreen: Corporations Prevail Over Consumers

It is hard to think of too many industries that concealed the truth about their product more aggressively, or misled the consuming public more deviously, than Big Tobacco did for decades. So, to see how far judicial corporatism has gone, consider how conservatives swung into action three years ago to protect the profits of the Philip Morris corporation in a fraud case brought by a widow who lost her husband, a long-term three-pack-a-day smoker, to the ravages of lung cancer.

In Philip Morris USA v. Williams (2007),18 the Supreme Court reversed a $79.5 million punitive damage award handed down against the tobacco giant by a jury which had heard damning evidence of the company’s massive disinformation campaign to suppress the truth about the health effects of smoking. In a 5-4 decision (with a few of the usual justices switching places) , the majority (Breyer, Roberts, Kennedy, Souter and Alito) found that the Due Process Clause forbids as a consideration in a jury’s calculation of punitive damages the harm that was caused to the consumer public beyond the actual named parties in the case. This counter-intuitive decision negates the whole meaning of “punitive” damages which are meant precisely to punish and deter misconduct by tortfeasors who make themselves a threat to the general public health and safety. This is a startling victory not for honest business but for those large corporations that inject dangerous products into the stream of commerce.

Philip Morris USA v. Williams is very much in line with the conservative bloc’s efforts to straitjacket the rights of plaintiffs suing large corporations and parallels its treatment of plaintiffs against other powerful interests, as demonstrated by Ashcroft v. Iqbal (2009)19 – a decision that imposes stiflingly difficult new pleading standards on plaintiffs generally seeking access to justice. With every passing year, the courthouse door is getting harder and harder to open for ordinary human plaintiffs.

A Nation Divided Over Citizens United

As egregious as many of the Court’s pro-corporate statutory decisions have been, its constitutional ruling in Citizens United elevates jurisprudential corporatism to an even higher plane with sweeping political implications at all levels. It dramatically shifts the center of gravity in American democracy.

To collect a sense of the staggering implications of Citizens United, take Exxon-Mobil, whose political action committee (PAC) raised just under $1 million in the 2008 election cycle from executives and members of its board, a not insignificant sum of money that the PAC was able to invest in races across America. (Of course, the company also has thick contingents of lobbyists, public relations personnel, and government relations specialists on hand too.) This seems fair enough—the individuals who run the company have a right to give and participate in politics as citizens by putting their own money into a voluntary political fund.

But in the same year, Exxon-Mobil amassed profits of $85 billion.

Now, imagine that Citizens United was already the law and the company spent a modest 10% of its profits in the 2008 elections–$8.5 billion—to elect its friends and defeat its enemies. This would have been more than was spent by the Obama campaign, the McCain campaign, every U.S. House and Senate candidate and every state legislative candidate in the country combined.

That’s one corporation. Imagine what the Fortune 500 could unleash on us.

Would the public interest ever have a chance to prevail over the opposition of the pharmaceutical companies, the insurance companies, Big Oil, or what President Eisenhower called the “military-industrial complex”?

In order to remake our politics in this way, the Supreme activists first had to completely redefine the question in the case. The plaintiff organization, Citizens United, which had received business corporation contributions, sought a limited statutory holding that the McCain-Feingold “electioneering communications” provisions did not apply to a pay-per-view made-for-television movie which was made available for purchase to the public but not broadcast on the air like ordinary political commercials. This was a perfectly reasonable request that would have allowed the conservative justices to get where they were going in the “minimalist” fashion they claim to prefer. But, alas, it was not nearly enough for them. After oral argument, they insisted that the parties go back and re-brief and reargue the entire case to focus on a sweeping question that had not been raised before: whether the Court’s ruling in Austin v. Michigan Chamber of Commerce20 was wrong and private corporations enjoy the same constitutional rights as actual human beings in electoral politics.

Once this outburst of judicial activism reframed the case, five reliably pro-corporate justices (Kennedy, Roberts, Scalia, Thomas and Alito) proceeded to dishonor many decades of jurisprudence that had treated corporations not as citizens armed with political rights but as subordinate “artificial entities” chartered and regulated by the state for economic purposes and not endowed with the political rights of the people.

This was the working assumption of not only progressive justices but deeply conservative ones who were faithful to the text of the Constitution and not under the spell of corporate power. Chief Justice John Marshall, the great hero of prior generations of judicial conservatives, wrote in the Dartmouth College21 case that: “A corporation is an artificial being, invisible, intangible and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of creation confers upon it . . .”22

In our time, Justice Byron White pointed out that we endow private corporations with all kinds of legal benefits—”limited liability, perpetual life, and the accumulation, distribution and taxation of assets”—in order to “strengthen the economy generally.” But a corporation thus endowed by the state is placed “in a position to control vast amounts of economic power which may, if not regulated, dominate not only the economy but also the very heart of our democracy, the electoral process.” The state, he argued, has a compelling interest in “preventing institutions which have been permitted to amass wealth as a result of special advantages extended by the State for certain economic purposes from using that wealth to acquire an unfair advantage in the political process. . .”23

Justice White then delivered the key principle that ought to control our constitutional understanding of the corporation’s political ambitions: “The state need not permit its own creation to consume it.”

Today, of course, this principle has been repudiated by the Roberts Court whose interpretation of the First Amendment means that the state must permit its own creation to consume it.24

The Roberts Court’s constitutionalization of corporate political power puts it far to the right of traditional conservative jurisprudence, which was emphatically clear that corporations are “artificial entities” chartered for economic purposes, and thus not to be confused with political parties, social movements or membership organizations.

Consider the lucid views of Chief Justice William Rehnquist, who was of course no great friend on the Court to consumers, workers or the environment but at least never tried to invent constitutionally-anchored political rights for business corporations.25

Rehnquist embraced Chief Justice Marshall’s statement that a “corporation is an artificial being, invisible, intangible, and existing only in contemplation of law,” and aggressively questioned theories of the “personhood” of the corporation. He wrote that he could not see why “liberties of political expression” are “necessary to effectuate the purposes for which States permit commercial corporations to exist. . . . Indeed, the States might reasonably fear that the corporation would use its economic power to obtain further benefits beyond those already bestowed.”26

Rehnquist’s common-sense views on the juridical status of the corporation have been jettisoned by the Roberts Court. The “conservatives” have now bulldozed the wall of separation between corporate wealth and public elections.

It goes without saying that the people must act over time to rebuild the wall of separation that the Court has torn down. In the meantime, it is imperative that the president nominate and the Senate confirm Justices who will place the first three words of the Constitution—”We, the People”—above the relentless juridical project to put corporations first.